Philippines: PH to Top Tax Goal, Says Japan Tobacco

Source from:  Manila Standard Today (ph)  08/19/2013

The government can meet its excise tax collection target, if not exceed it, as the drop in consumption is not as dramatic as projected, Japan Tobacco Inc. general manager Manos Koukourakis said over the weekend.

Koukourakis cited that the cigarette prevalence in the Philippines is 52 percent, which means one in every two Filipinos smoke.

"That ratio went down to 46 percent, that happened gradually but not immediately," he said. "Now as we speak, it's even less. It is probably 42 to 43 percent."

Koukourakis said about 18 million Filipinos smoke and consume at least 12 billion sticks of cigarettes a year.

A study commissioned by Japan Tobacco showed a decline in consumption of about 12.4 percent to 11.6 billion to 11.7 billion cigarettes. "We believe that the truth is a little bit smoother, it's not 12 percent, but around eight percent," Koukourakis said.

Japan Tobacco produces brands such as Winston, Camel and Salem outside the United States.

The government had expected cigarette consumption to drop by 50 percent following the enactment of the excise tax bill.

Koukourakis, however, said the expectations of the government and private companies were wrong.

"The reality is that the total market consumption fell by eight percent and not by 50 percent," he said.

He said the influx of foreign brands had considerably driven the smoking public to continue consuming cigarettes.

Koukourakis said the lesser premium priced cigarettes took a portion of the market share of the premium brands.

These are cigarettes that are priced at P1 per stick, or P17.80 for every pack.

"Before the sin tax enactment, you have less than 10 [brands of cigarettes], today you have more than 30, that means consumers have cheaper choices that they had before," he said.

Koukourakis predicted the Filipinos would continue to consume tobacco in the long run, translating into more revenues for the government.

"This is a successful legislative measure from a government perspective, because at the end of the day, the government will achieve the financial target it

had, so we can appreciate that it is in the right direction. Government in that respect did a good job," Koukourakis said. Enditem